DOJ Orders More Aggressive Fraud Crackdown, Including Asset Seizures Before Indictments
By CU Today Staff —
WASHINGTON—The Department of Justice is directing federal prosecutors to take a more aggressive approach to fraud investigations, including seizing assets before indictments, shutting down digital infrastructure used in fraud schemes and seeking tougher sentences in certain cases.
The new policy, outlined in an Oct. 8 memorandum issued by Assistant Attorney General Colin McDonald, head of the department’s National Fraud Enforcement Division, calls for prosecutors to use the full range of criminal, civil and asset-forfeiture authorities to disrupt fraud operations before they inflict additional losses.
The directive, designated 26-13, instructs prosecutors to draw on the division’s authority over tax fraud, securities fraud, consumer fraud and cybercrime rather than limiting investigations to traditional fraud charges. It also calls for greater use of cooperating witnesses, aggressive prosecution of corporate wrongdoing, arrests and pretrial detention where appropriate, and stronger sentencing advocacy, including requests for sentences above advisory federal guidelines in appropriate cases. The DOJ said the objective is to attack fraud networks from multiple directions while recovering stolen assets.
The guidance follows the creation earlier this year of the National Fraud Enforcement Division, which has been charged with coordinating federal efforts against fraud involving government programs, businesses and individuals. McDonald told the Financial Times the division would use whichever enforcement tool was most effective in a particular case. The newspaper reported the division has grown to approximately 500 attorneys and staff and includes a specialized asset-recovery operation. The Government Accountability Office estimates federal losses from fraud at between $233 billion and $521 billion annually, according to the DOJ.
For financial institutions, including credit unions, the tougher enforcement posture could have implications for investigations involving financial fraud, money laundering, cybercrime and the movement of illicit proceeds through accounts. The DOJ has already demonstrated its expanded enforcement approach through a nationwide crackdown on COVID-era loan fraud involving more than 160 defendants and approximately $245 million in intended losses. The new directive signals that prosecutors will increasingly emphasize early disruption, asset recovery and tougher penalties rather than waiting until investigations culminate in criminal charges.
Originally reported by CU Today.